PETITIONER:
TIMBLO IRMAOS LTD., MARGO
Vs.
RESPONDENT:
JORGE ANIBAL MATOS SEQUEIRA & ANR.
DATE OF JUDGMENT16/12/1976
BENCH:
BEG, M. HAMEEDULLAH
RAY, A.N. (CJ)
SINGH, JASWANT
CITATION:
1977 AIR 734 1977 SCR (2) 451
1977 SCC (3) 474
ACT
Construction of a power of attorney--Principles of
ejusdem generis---Object-Purpose--Nature--Frame--Provisions
and language used--Dictionary meaning --Surrounding circum-
stances, whether power includes--Incidental to the ascer-
tained objects.
Evidence Act 1872--Sec. 92 proviso 2--Existence of
separate oral agreement on which written agreement is si-
lent.
HEADNOTE
The appellant.company sued Mr. & Mrs. Sequeira for
recovery of certain amounts under two contracts of supply of
iron ore. The first contract was signed by Ramesh holder of
a power of attorney of Sequeiras and the second contract was
signed by Ramesh’s father as the agent of Ramesh. Under the
two contracts Sequeiras were supposed to supply and load
iron ore and were liable to pay demurrage in case of delay
in loading the ship and were entitled to receive certain
despatch money if the loading was made earlier. Sequeiras
filed their counter claims. The Court did ’not arrive at a
definite conclusion about the quantity of ore supplied and
left that to be determined in execution proceedings. The
court found that the first contract was binding between the
appellant and Sequeiras as it had been ratified by Sequerias
and acted upon by the appellant. The court, however, held
that the second contract was not ’binding on Sequeiras as
Ramesh had a limited authority and, therefore, he could
not constitute his father his attorney for the purposes of
executing the second agreement. The trial Court also found
that the appellant had committed breaches of the contract
but left the quantum of damages to be determined in execu-
tion proceedings. The decree of the .trial Court was sub-
stantially confirmed in appeal by the Additional Judicial
Commissioner.
HELD: 1. The Judicial Commissioner erred in concentrat-
ing on only one dictionary meaning of. the word "exploita-
tion" used in the power of attorney executed by Sequeiras m
favour of Ramesh. The court, while interpreting a power of
attorney, has to construe the document as a .whole m the
light of its purpose and surrounding circumstances and the
transactions meant to be governed by it. Practice and custom
have also some bearing on the nature and effect of the
power of attorney. The purpose of the powers conferred on
the power of attorney have to be ascertained having regard
to the need which gave rise to the execution of the docu-
ment, the practice of the parties and the manner in which
parties themselves understood the purpose of the document.
The powers. which are absolutely necessary and incidental to
the execution of the ascertained purposes of the general
powers given must be necessarily implied. Applying the
above rules of interpretation the court came to the conclu-
sion that Ramesh had power to appoint an agent to execute
the contract in question and therefore the second .contract
was also binding on Sequeiras [454A-B, 456A-H]
Bryant, Powls, and Bryant, Limited v. La Banque De
Peuple etc. (1893) A.C. 170 @ 177 and 179 and Jonmenjoy
Coondoo v. George ,Alder Watson, 10 I.L.R. Cal. 901 @ 912
approved.
O.A.P.R.M.A.R. Adaikappa Chettiar v. Thomas Cook & Son
(Bankers) Ltd. AIR 1933 PC 78, distinguished.
2. The implied powers cannot go beyond the scope of the
general object tances do not derrogate from the width of the
general power initially conferred of the power of attorney
but must necessarily be subordinated to it Specific in to
such a case ejusdem generis cannot be applied. The mode of
construing a document and the rules to be applied to extract
its meaning correctly depends upon not only the nature and
object but also upon the frame, provisions, and language of
the documents. In cases of uncertainty the rule embodied in
proviso 2 to section 92 of the Evidence Act which is ap-
plicable to contracts can be invoked.
452
The ultimate decision of such a matter turns upon the prac-
tice and particular facts of each case. [458D-P]
3. The findings arrived at by the Appellate Court that
Sequeiras were prevented from performing their part of the
contract, owing to the failure of the appellant to provide
either sufficient lighting or enough winches to enable due
performance of the contract, is unexceptionable. The Judi-
cial Commissioner rightly concluded that the company had not
discharged its own part of the contract so that it could not
claim demurrage or damages. [458-G-H]
The court partly allowed the appeal and remanded the
matter back to the trial court for determining the liabili-
ties of the parties in the light of the judgment. [459E-F]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1868 of 1968.
Appeal from the Judgment and Decree dated the 21st
February 1968 of the Judicial Commissioner’s Court at Goa,
Daman and Diu in Appeal No. 3370 of 1964.
S.V. Gupte, Naunit Lal and (Miss) Lalita Kohli for the
Appellant.
V.C. Mahajan and R.N. Sachthey for Respondents.
The Judgment of the Court was delivered by
BEG, J.--The Plaintiff-appellant Timblo Irmaos Ltd.,
(hereinafter referred to as ’the Company’) had sued Jorge
Anibal Matos Sequeira and his wife (hereinafter referred to
as Sequeiras’) for recovery Rs. 2,82,141/- claimed under a
contract of 23rd January, 1954, and a sum of Rs. 1,14,700/-,
claimed under another contract of 4th February, 1954. The
Sequeiras counter-claimed Rs. 3 lakhs as price of 8000 tons
of iron ore supplied to the Company; and pleaded that a
sum of Rs. 1,13,000/-, advanced by the Company to the Se-
queiras was to be adjusted after final determination of the
amount due as price, of goods sold and supplied.
The Sequeiras are holders of a mining concession. They,
it was alleged, had entered into the two contracts, one of
23rd January, 1954, through their attorney, Ramesh Jethalal
Thakker (hereinafter referred to as Thakker Junior), for
supplying 8000 tons of iron ore, altered in some respects,
by a later agreement, and the other of 4th February, 1954,
alleged to be binding on the Sequeiras although entered
into through Jethalal C. Thakker (hereinafter referred to
as ’Thakker Senior’), the.father of R.J. Thakker. The most
important clause in the contract of 23rd January, 1954, was
that iron ore should be loaded in a ship ’Mary K’ at
Marmagoa, and that the loading must be done at the rate of
500 tons per ’weather working day" of 24 hours. Under the
contract, the rate of demurrage for not loading the ship in
time was to be paid at the rate of US $ 800.00 per day an
pro rata for each fraction of a day. The buyer company was
to pay what was called "despatch money" at half the rate of
demurrage for time saved in loading. The payment was to be
in the Portuguese Indian rupees at the exchange rate of Rs.
4.76 per US $. The buyers had also to make an initial
payment of Rs. 55,000/- as soon, as delivery by load-
ing began. The buyers were also to establish a
Letter of Credit, before 27th January, 1954, in favour of
453
the sellers, the Sequeiras, for the full value of the iron
ore after deducting Rs. 55,000/- paid initially, and Rs. 1/4
per gross ton awaiting final settlement by presentation
within ten days, at the bank named in the agreement, by
presentation of the certificate of weight issued by the
Master of the vessel. Certificates of the quality and
specifications and of final weighment were to be sent by
the buyers after the vessel’s arrival at the port of dis-
charge.
The second agreement of 4th February, 1954, relates to
loading of 6000 to 9000 tons of iron ore of given quality
and specifications in the ship ’Mary K’ at the minimum rate
of 500 tons per day commencing delivery within 24 hours of
the buyer notifying the requirements to the seller. It also
contained other stipulations similar to those of the first
one. The important point to note about this agreement is
that it is signed by Jethalal C. Thakker as the attorney of
his son Ramesh Jethalal Thakker.
It appears that the clause relating to initial payment was
changed so that the sellers, Sequeiras, were paid Rs.
1,13,000/- between 25th January, 1954, and 22nd July, 1954.
It also appears that there was delay in delivery for which
the plaintiff claimed demurrage. There were also complaints
about alleged departure by the seller from the specifica-
tions agreed upon. The Sequeiras, the sellers, had it
seems, also applied for an interim injunction so that the
ship’s loading capacity may be checked. Under orders of the
Court, an inspection of the ship was made and a report was
submitted by an expert on 15th March, 1954, after the deter-
mination of its loading capacity so that the ship could
finally sail only on 16th March, 1954.
The Margao Comarca Court, where the claim and the
counter claims were filed, held that the seller’s attorney,
Thakker Junior, who had received Rs. 1,13,000/-, which had
to be deducted from the price of the iron ore supplied, was
not duly authorised by the power of attorney executed by the
Sequeiras to sell. The Court did not find enough material
to reach a definite conclusion about the quantity of ore
supplied and left that to be determined in execution pro-
ceedings. It, however, held the first contract to be binding
between the parties as it had been ratified by the seller
and acted upon by the buyer. But, the second contract was
held to be not binding upon the Sequeiras as Thakker (Jun-
ior) was found to have been given only a limited authority
so that he could not constitute his father his attorney for
the purpose of executing the second agreement. The Trial
Court accepted the basis of the counter-claim of the Sequei-
ras and found that the company had committed breaches of
contract but left the quantum of damages to be determined in
execution proceedings.
The decree of the Trial Court was substantially affirmed
in appeal. Nevertheless, the Additional Judicial Commission-
er Goa, Daman & Diu, had modified the decree, the appellant
company has come up to this Court in appeal as of right.
Two questions arise for determination before us. The first
is whether the second contract of 5th February, 1954, was
duly covered by the authority conferred by the Sequeiras
upon their attorney, Ramesh Jethalal Thakker, or not. The
second
454
relates to the amount of demurrage, if any, payable by the
Sequeiras, the defendants-respondents, to the plaintiff-
appellant.
On the first question, the Judicial Commissioner concen-
trated on the dictionary meaning of the word "exploitation"
used in the power attorney executed by the Sequeiras in
favour of Thackker Junior. The learned Judicial Commissioner
took the meaning of the word from Chambers’ 20th Century
Dictionary which gave: "the act of successfully applying
industry to any job, as the working of mines, etc; the act
of using for selfish purposes". The learned Judicial Com-
missioner also referred to the inability of learned Counsel
for the company to cite a wider meaning from the Oxford
Dictionary which the learned Counsel had carried with him to
the Court. The Judicial Commissioner then ruled:
"Hence, I see no escape from the conclu-
sion that on the basis of the power of attor-
ney given by Sequeira to Ramesh the latter
could not have entered into any agreement for
sale of ore extracted from the mine belonging
to Sequeira on his behalf. Consequently,
Sequeira is not bound by the agreement dated
4th of February, 1954".
As already mentioned by us, the first con.tract of 23rd
January, 1954, was held to-be binding despite this finding
because the parties had acted upon it and dealt with each
other on the basis that such a contract existed. We think
that this background can be taken into account as indicating
what the parties themselves understood about the manner in
which the words used in the power of attorney dated 17th
January, 1953, executed by Sequeiras in favour.of Thackker
Junior was related to the actual facts or dealings between
or by the parties. Moreover, the power of attorney had to be
read as a whole in the light of the purpose for which it was
meant. As it is not lengthy, we reproduce its operative
part. It reads:
"Jorge Anibal de Matos Sequeira, mar-
ried, major of age, businessman, landlord,
residing in Panglm, whose identity was war-
ranted by witnesses, said in the presence of
the same witnesses that by the present letter
of attorney he appoints and constitutes his
attorney Mr. Ramesh Jethalal, Bachelor, major
of age, businessman, from Bombay, residing at
present in Bicholim and conters on him the
power to represent him, to make applications,
allegations, and to defend his right in any
public offices or Banks, to draw up and sign
applications, papers, documents and corre-
spondence; specially those tending to acquire
petrol, gunpowder, train, transport vehicles,
machines, furniture (alfaias) and other in-
struments used in mining industry, apply for
and obtain licences for importation and expo-
ration, to give import and export orders, even
temporary, sign applications, suits and only
other things necessary, attach and withdraw
documents, make declaration. even under oath
and in general any powers necessary for the
exploitation of the mine named Pale Dongor
situate at Pale for the concession of which
the said Siqueira applied and which he is
going to obtain to impugn, object,
455
protect and prefer appeals upto the higher
Courts, notify and accept notifications and
summons in terms of Sec. 35 and 37 of the
C.P.C., to use all judicial powers without any
limitation, to subrogate these powers to some
one else. This was said and contracted. The
witnesses were Bablo Panduronga Catcar ad
Xec Adam Xecoli, both married landlords, major
of age from Bicholim who sign below".
Apparently, practice and custom have some bearing on
these transactions in Goa. It is this reason that, although
the power of Attorney was executed by Mr. Sequeira, yet, his
wife was impleaded, according to the practice in Goa, and no
objection was raised either on the ground that she was
wrongly impleaded or that the power of attorney was vitiated
on the ground that it was executed only by her husband. In
any case, the subsequent agreement of 23rd January, 1954,
which was held to have been acted upon, and the similar
agreement of 5th February, 1954, of which also the defend-
ants were bound to have and did have full knowledge, were
never repudiated by Sequeiras, before the filing of the
suit before us. Indeed, the agreement of 5th February,
1954, appears to be a sequal to the first agreement of 23rd
January, 1954. We do not think that the two could be really
separated in the way in which the Judicial Commissioner
thought that they could be by holding that the one was acted
upon whereas the other was not. In any case, the second was
the result of and a part of the same series of dealings
between the parties.
We do not however propose forest our findings on the
ground that the parties are bound by the second agreement
due to some kind of estoppel. We think that the terms of the
power of attorney also justify the meaning which the parties
themselves appear to have given to this power of attorney
that is to say, a power to conduct business on behalf of the
Sequeiras in such a way as to include sales on behalf of
Sequeiras.
We think that perhaps the most important factor in
interpreting a power of attorney is the purpose for which it
is executed. It is evident that the purpose for which it
is executed must appear primarily from the terms of the
power of attorney itself, and, it is only if there is an
unresolved problem left by the language of the document,
that we need consider the manner in which the words used
could be related to the facts and circumstances of the case
or the nature or course of dealings. We think that the rule
of construction embodied in proviso 6 to Section 92 of the
Evidence Act, which enables the Court to examine the facts
and surrounding circumstances to which the language of the
document may be related, is applicable here, because we
think that the words of the document, taken by themselves,
are not so clear in their meanings as the learned Judicial
Commissioner thought they were.
As we have already mentioned, the learned Judicial
Commissioner chose to concentrate on the single word "ex-
ploitation" torn out of its context. The word "exploita-
tion" taken by itself, could have been used to describe and
confer only such general powers as may be
13--1546 SCI/76
458
them. If the word ’negotiate’ had stood alone,
its meaning might have been doubtful, though,
when applied to a bill of ’exchange or ordi-
nary promissory note, it would probably be
generally understood to mean to sell or dis-
count, and not to pledge it. Here it does not
stand alone, and, looking at the words
with which it is coupled, their Lordships are
of opinion that it cannot have the effect
which the appellant gives to it, and, for the
same reason, ’dispose of’ cannot have that
effect".
We think that this case also bears out the mode of construc-
tion adopted by us.
We were then referred to O.A.P.R.M.,A.R..Adaikappa
Chettiar v. Thomas Cook & Son (Bankers) Ltd.,(1) where the
well known principle of ejusdem generis was applied to hold
that general words following words conferring specifically
enumerated powers "cannot be construed so as to enlarge the
restricted power there mentioned". In this case, the
purpose of the general power was subordinated to the specif-
ic powers given which determined the object of the power
of attorney. There is no deviation in this case from the
general rules of construction set out above by us. We have
indicated above that implied powers cannot go beyond the
scope of the general object of the power but must necessari-
ly be subordinated to it. In fact, in a case like the one
before us, where a general power of representation in’
various business transactions is mentioned first and then
specific instances of it are given, the converse rule, which
is often specifically stated in statutory provisions (the
rules of construction of statutes and documents being large-
ly common), applies. That rule is that specific instances
do not derrogate from the width of the .general power ini-
tially conferred. To such a case the ejusdem generis rule
cannot be applied. The mode of construing a document and
the rules to be applied to extract its meaning correctly
depend upon not only upon the nature and object but also
upon the frame, provisions, and language of the document. In
cases of uncertainty, the rule embodied in proviso 2 to
Section 92 of the Evidence Act, which is applicable to
contracts, can be invoked. Thus, the ultimate decision, on
such a matter, turns upon the particular and peculiar facts
of each case.
Coming now to the second question, we find that the
findings of fact recorded by the Judicial Commissioner are
unexceptionable. Firstly, it was found that, although, under
the contract, the defendants-respondents could load iron ore
at any time during 24 hours, which included the night, yet,
the defendants were prevented from doing so owing to the
failure of the plaintiff to provide either sufficient light-
ing or enough winches to enable due performance of the
contract. Secondly, it was admitted that the appellant
never opened a Letter of Credit with the named bank by 27
January, 1954, as promised by it. Thirdly, the delay in
loading was held to be due to the fault of the company. The
Judicial Commissioner rightly concluded that the company had
not discharged its own part of the contract so that it could
not claim
(1) A.I.R. 1933 PC 78.
459
demurrage or damages. Indeed, it was found that the company
did not have to pay any demurrage at all to the shippers for
delayed departure.
Learned Counsel for the appellant relied strongly on the
following terms in the contract of 23rd January, 1954:
"Demurrage (if any) in loading payable
by Seller at the rate of US $ 800.00 per
running day fraction of day pro rata. Buyers
to pay despatch money at half the demurrage
rate for all time saved in loading. Payment
either way in Portuguese Indian rupee currency
at the rate of exchange of Rs. 476/- for US $
100.00."
The contention was that this created an absolute liability
to pay for delay in loading irrespective of whether the
company had to pay the shippers any demurrage. It was urged
that the liability was upon the seller irrespective of
whether such payment had to be made to the shipping company
or not. We think that the demurrage could not be claimed
when the delay in loading was due to the default of the
respondents themselves. It is apparent that the basis upon
which the agreement to pay demurrage rested was that the
appellant will afford proper facilities for loading. When
the appellant itself had committed breaches of its obliga-
tions, it is difficult to see how the respondents could be
made responsible for the delay in loading. We think that
the Judicial Commissioner had rightly disallowed this part
of the claim.
In the result, we partly allow this appeal, set aside
the finding of the Judicial Commissioner as regards the
binding nature of the contract dated 5th February, 1954. We
hold that this document embodied the terms of an agreement
which was legally binding on both sides before us. The case
will now go back to the Trial Court for determination of the
liabilities of the parties to each other for alleged
breaches of contract except to the extent to which the
findings negative the claim to demurrage and the admitted
payment of Rs. 1,13,000/by the appellant to the defendants
which will have to be taken into account. The parties will
bear their own costs.
P.H.P. Appeal allowed in
part
462
Ltd., Calcutta v. Commissioner of Excess Profits Tax, West
Bengal(1) wherein the High Court held .that when a party at
whose instance the reference had been made under section
66(1) of the Indian Income tax Act, 1922 does not appear at
the hearing of the reference, the High Court is not bound to
answer the question referred to it and should not do so. It
is urged by Mr. Manchanda that the above decision has been
followed by some of the other High Courts. As against that
Mr. Desai on behalf of the appellant has urged that the
correctness of those decisions is open to question in view
of the decision of this Court in the case of Commissioner of
Income-tax, Madras v.S. Chenniappa Mudaliar(1). It was held
by this Court in that case that an appeal filed by the
assessee before the Tribunal under section 33 of the Act
should be disposed of on merits and should not be dismissed
in default because of non-appearance of the appellant. The
Court in this context referred to section 33(4) of the Act
and particularly the word "therein" used in that sub-sec-
tion. It is urged by Mr. Desai that as the Tribunal is
bound to dispose of the appeal on merits even though a party
is not present, likewise the High Court when a question of
law is referred to it, should dispose of the reference on
merits and answer the question referred to it. In our
opinion, it is not essential to express an opinion about
this aspect of the matter, because we are of the opinion
that the High Court was not functus Officio in entertaining
the application which had been filed on behalf of the appel-
lant for re-hearing the reference and disposing of the
matter on merits.
A party or its counsel may be prevented from appearing at
the hearing of a reference for a variety of reasons. In
case such a party shows, subsequent to the order made by the
High Court, declining to answer the reference, that there
was sufficient reason for its nonappearance, the High Court,
in our opinion, has the inherent power to recall its earlier
order and dispose of the reference on merits. We find it
difficult to subscribe to the view that whatever might be
the ground for non-appearance of a party, the High Court
having once passed an order declining to answer the question
referred to it because of the non-appearance of that party,
is functus officio or helpless and cannot pass an order for
disposing of the reference on merits. The High Court in
suitable cases has, as already mentioned, inherent power to
recall the order made in the absence of the party and to
dispose of the reference on merits. There is nothing in any
of the provisions of the Act which, either expressly or by
necessary implication, stands in the way of the High Court
from passing an order for disposal of the reference on
merits. The courts have power, in the absence of any ex-
press or implied prohibition, to pass an order as may be
necessary for the ends of justice or to prevent the abuse of
the process of the court. To hold otherwise would result in
quite a number of cases in gross miscarriage of justice.
Suppose, for instance, a party proceeds towards the High
Court to be present at the time the reference is to be taken
up for hearing and on the way meets with an accident.
Suppose, further, in such an
(1) 27 I.T.R. 188. (2) 74. I.T.R 41.
463
event the High Court passes an order declining to answer the
question referred to it because of the absence of the person
who meets with an accident. To hold that in such a case the
High Court cannot recall the said order and pass an order
for the disposal of the reference on merits, even though
full facts are brought to the notice of the High Court,
would result in obvious miscarriage of justice. It is to
meet such situations that courts can exercise in appropriate
cases inherent power. In exercising inherent power, the
courts cannot override the express provisions of law. Where
however, as in the present case, there is no express or
implied prohibition to recalling an earlier order made
because of the absence of the party and to directing the
disposal of the reference on merits, the courts, in our
opinion, should not be loath to exercise such power provided
the party concerned approaches the court with due diligence
and shows sufficient cause for its non-appearance on the
date of hearing.
Our attention had been invited to the decision of the Alla-
habad High Court in Roop Narain Ramchandra (P) Ltd. v.
Commissioner of Income-tax, U.p.(1) wherein the High Court
held that it has no power to recall an order returning a
reference unanswered. For the reasons stated above, we are
unable to agree with the view taken by the Allahabad High
Court in that decision. The facts brought out in the appli-
cation flied on behalf of the appellant show, in our opin-
ion, that there was sufficient cause for the non-
appearance on behalf of the appellant on the date of hear-
ing as well as for the non-filing of the paper books within
time. It also cannot be said that there was lack of dili-
gence on the part of the appellant in approaching of the
High Court for recalling it’s earlier order and for dispos-
ing of the reference on merits. We accordingly accept the
appeal, set aside the order of the High Court and remand
the case to it for answering the questions referred to it on
merits. Looking to all the circumstances, We make no
order as to costs.
M.R. Appeal al-
lowed.
(1) 84 I.T.R. 181.
466
The Judgment of the Court was delivered by
BHAGWATI, J.---There is a house bearing No. 10-A situ-
ate at Khuldabagh in the city of Allahabad belonging to
respondent No. 3. This house consists of a ground floor and
a first floor. There are two tenements on the ground floor
and two tenements on the first floor. Each of the two tene-
ments in the first floor is in the possession of a tenant.
The tenement on the northern side of the ground floor is in
the possession of respondent No. 3, while the tenement on
the southern side is in the possession of the appellant as a
tenant since the last over 35 years. The appellant pays
rent of Rs. 4/- per month in respect of the tenement in his
occupation. Respondent No. 3, after determining the tenan-
cy of the appellant, made an application before the Rent
Control and Eviction Officer, Allahabad under section 3 of
the U.P. Rent Control & Eviction Act, 1947 for permission to
file a suit to eject the appellant on the ground that she
bona fide required the rented premises in the possession of
the appellant for her use and occupation. The Rent Control
& Eviction Officer, on a consideration of the evidence led
before him, came to the conclusion that the need of respond-
ent No. 3 for the rented premises was not bona fide and
genuine and on this view, he rejected the application of
respondent No. 3 by an order dated 23rd February, 1972.
Respondent No. 3 preferred a revision application against
the decision of the Rent Control and Eviction Officer to the
Commissioner and, on the coming into force of the U.P. Urban
Buildings (Regulation of Letting, Rent & Eviction) Act, 1972
(U.P. Act No. 13 of 1972), this revision application came to
be transferred to the District Court under section 43 (m) of
that Act and it was numbered as Civil Appeal No. 245 of
1972. The District Judge by an order dated 12th January,
1973 agreed with the view taken by the Rent Control and
Eviction Officer and dismissed the appeal.
However, within a short time thereafter, respondent No.
3 undaunted by her failure, filed an application before the
Prescribed Authority on 18th January, 1974 under section
21(1) of U.P. Act No. 13 of 1972 claiming release of the
rented premises in her favour on the ground that she bona
fide required them for occupation by herself and the members
of her family for residential purposes. The Prescribed
Authority held that Explanation (iv) to section 21(1) of
U.P. Act No. 13 of 1972 was attracted in the present case,
since the ground floor of house No. 10-A constitute a build-
ing, a part of which was under tenancy of the appellant and
the remaining part was in the occupation of respondent No. 3
for residential purposes, and hence it must be held to be
conclusively established that the rented premises were bona
fide required by respondent No. 3. The Prescribed Au-
thority also went into the question of comparative hardship
of the appellant and respondent No. 3 and observed that
greater hardship would be caused to respondent No. 3 by
refusal of her application than what would be caused to the
appellant by granting it. On this view, the Prescribed
Authority allowed the application of respondent No. 3 and
released the rented premises in her favour.
The appellant being aggrieved by the order passed by the
Prescribed Authority prefered an appeal to the District
Court, Allahabad. The
467
District Court agreed with the view taken by the Prescribed
Authority that Explanation (iv) to section 21(1) of U.P. Act
No. 13 of 1972 was applicable to the facts of the present
case and "that fact conclusively proved that the building
was bona fide required" by respondent No. 3. But on the
question of greater hardship, the District Court disagreed
with the conclusion reached by the Prescribed Authority and
held that the appellant was likely to suffer greater hard-
ship by granting the application than what respondent No. 3
would suffer by its refusal. The District Court accordingly
allowed the appeal and rejected the application of respond-
ent No. 3 for release of rented premises.
This led to the filing of a writ petition by respondent
No. 3 in the High Court of Allahabad challenging the legali-
ty of the order rejecting her application. Respondent No. 3
contended that since her bona fide requirement of the
rented premises was established by reason of applicability
of Explanation (iv) to section 21 (1) of U.P. Act No. 13 of
1972, the question of comparative hardship was immaterial
and the District Court was in error in throwing out her
application on the ground that greater hardship would be
caused to the appellant by granting her application than
what would be caused to her by refusing it. The High Court
while dealing with this contention observed that the Pre-
scribed Authority had recorded a finding of fact that "the
accommodation on the ground floor constituted one building"
and "the respondent was in possession of a part of the
building and the land lady was in occupation of the remain-
ing part of the building for the residential purposes" and
this finding of fact reached by the prescribed Authority was
confirmed by the District court and in view of this finding
which the High Court a apparently thought it could not
disturb, the High Court proceeded on the basis that Expla-
nation (iv) to section 21 (1) of U.P. Act No. 13 of 1972 was
applicable in the present case. But the High Court went on
to point out that once it was held that Explanation (iv) to
section 21(1) of the U.P. Act No. 13 of 1972 was attracted,
there could be no question of examining comparative hard-
ship, for in such a case greater hardship of the tenant
would be an irrelevant consideration. The High Court on
this view allowed the writ petition, set aside the order of
the District Court and allowed the application of respondent
No. 3 for release of the rented premises but gave two
months’ time to the appellant to vacate the same. The appel-
lant being dissatisfied with this order passed by the High
Court preferred the present appeal with special leave ob-
tained from this Court.
Now, it may be pointed out straight away that if Explanation
(iv) to section 21(1) of U.P. Act No. 13 of 1972 is applica-
ble in the present case, the question of comparing the
relative hardship of the appellant and respondent No. 3
would not arise and respondent No. 3 would straight away be
entitled to an order of eviction as soon as she shows that
the conditions specified in the Explanation are satisfied.
Section 21 (1), as it stood at the material time with the
retrospective amendment introduced by the U.P. Urban Build-
ings (Regulation of Letting, Rent & Eviction) (Amendment)
Act, 1976 being U.P. Act
470
accommodation which is the subject-matter of tenancy. The
question thus is: what is the sense in which the word ’buil-
ding’ is used when it occurs for the second time in the
Explanation. The context clearly indicates that the word
’building’ is there used to denote a unit, of which the
accommodation under tenancy constitutes a part and the
remaining part is in the occupation of the land, lord for
residential purposes. The accommodation under tenancy and
the accommodation in the occupation of the landlord together
go to make up the ’building’. The use of the word ’part’ is
a clear pointer that the ’building’, of which the accommoda-
tion under tenancy and the accommodation in the occupation
of the landlord are parts, must be a unit. Where a super-
structure consists of two or more tenements and each tene-
ment is an independent unit distinct and separate from the
other, the Explanation would be of no application, because
each tenement would be a unit and not part of a unit. It is
only where there is a unit of accommodation out of which a
part is under tenancy and the remaining part is in the
occupation of the landlord, that the Explanation, would be
attracted. To determine the applicability of the Explana-
tion, the question to be asked would be whether the accommo-
dation under tenancy and the accommodation in the occupation
of the landlord together constitute one unit of accommoda-
tion ? The object of the Legislature clearly was that where
there is a single unit of accommodation, of which a part has
been let out to a tenant, the landlord who is in occupation
of the remaining part should be entitled to recover posses-
sion of the part let out to the tenant. It could never have
been intended by the Legislature that where a super-struc-
ture consists of two independent and separate units of
accommodation one of which is let out to a tenant and the
other is in the occupation of the landlord, the landlord
should, without any proof of bona fide requirement, be
entitled to recover possession of the tenement let out to
the tenant. It is difficult to see what social object or
purpose the legislation could have had in view in conferring
such a right on the landlord. Such a provision would be
plainly contrary to the aim and objective of the legisla-
tion. On the other hand, if we read the Explanation to be
applicable only to those cases where a single unit of accom-
modation is divided by letting out a part to a tenant so
that the landlord, who is in occupation of the remaining
part, is given the right to evict the tenant and secure for
himself possession of the whole unit, it would not unduly
restrict or narrow down the protection against eviction
afforded to the tenant. This construction would be more
consistent with the policy and intendment of the legislation
which is to protect the possession of the tenant, unless the
landlord establishes his bona fide requirement of the accom-
modation under tenancy. We may point out that Mr. Justice
Hari Swarup has also taken the same view in a well consid-
ered judgment in Chuntwo Lal v. Addl. District fudge. Alla-
habad(1) and that decision has our approval.
Since the question as to the applicability of Explana-
tion (iv) on the facts of the present case has not been
considered by the High Court as well as the lower courts on
the basis of the aforesaid construction of the Explanation,
we must set aside the judgment of the High Court as also the
order of the District Court and remand the case to the
District Court with a direction to dispose it of in the
light
(1975) 1 A.L.R. 362.
471
of the interpretation placed by us on the Explanation,
It was contended before us on behalf of the appellant that
since Explanation (iv) has been omitted by U.P. Act No. 28
of 1976, respondent No. 3 was no longer entitled to take
advantage of it and her claim for possession must fail.
But the answer given by respondent No. 3 to this contention
was that the omission of Explanation (iv) was prospective
and not retrospective and since Explanation (iv) was in
force at the date when respondent No. 3 filed her applica-
tion for release, she had a vested right to obtain release
of the rented premises in her favour by virtue Explanation
(iv) and that vested right was not taken away by the pro-
spective omission of Explanation (iv) and hence she was
entitled to rely on it despite its omission by U.P. Act No.
28 of 1976. We have not pronounced on these rival conten-
tions since we think it would be better to leave it to the
District Court to decide which contention is correct. If
the District Court finds that by reason of the omission of
Explanation (iv) by U.P. Act No. 28 of 1976 respondent No. 3
is no .longer entitled to rely on it to sustain her claim
for release of the rented premises in her favour, it will be
unnecessary for the District Court to examine the further
question as to whether Explanation (iv) is attracted on the
facts of the present case, If, on the other hand, District
Court finds that the omission of Explanation (iv) by U.P.
Act No. 28 of 1976 being prospective and not retrospective,
respondent No. 3 is entitled to avail of that Explanation,
the District Court will proceed to decide whether the two
tenements or the .around floor constituted one single unit
of accommodation so as to attract the applicability of
Explanation (iv) and for this purpose, the District Court
may, if it so thinks necessary, either take further evidence
itself or require further evidence to be taken by the Pre-
scribed Authority.If the District Court finds that the case
is covered by Explanation (iv), there would be no ques-
tion of examining comparative hardship of the appellant
and respondent No. 3, and respondent No. 3 would
straight away be entitled to an order of release of the
rented premises in her favour. On the other hand, if the
District Court comes to the conclusion that by reason of
the omission of Explanation (iv) of the U.P. Act No. 28 of
1976 respondent No. 3 is not entitled to rely on it or that
Explanation (iv) is not applicable on the facts of the
present case, the application of respondent No. 3 would
fail, since it has already been found by the District
Court--and we do not’ propose to disturb this finding--that
the appellant would suffer greater hardship by granting of
the application than what would be suffered by respondent
No. 3 if the application were to be refused. We accordingly
remand the matter to the District Court with no order as to
costs.
P.H.P. Appeal allowed.
14-1546 SCI/76
472